Claim filing under IBC – A Comprehensive Guide

Introduction

One significant piece of legislation that attempts to expedite the bankruptcy resolution process for creditors, organizations, and individuals is India’s Bankruptcy & Bankruptcy Code (IBC). The submission of claims by creditors is one of this code’s most important features. This blog will provide a detailed explanation of the procedure, as well as details on Claim filing under IBC when claims must be received, how to file a claim before a resolution professional (RP), the intermediary resolution professional (IRP), liquidator, etc., and the crucial question of the time frame that creditors have to file their claims. 

What is CoC (Committee of Creditors)?

The primary responsibility of the IRP is to notify all of the corporate debtor’s creditors using a public notification published in reputable media. Subsequently, the creditors must submit their claims, along with all supporting documentation, in the appropriate forms as directed by the Insolvency and Bankruptcy Board of India (IBBI) against the corporate debtor. The IRP forms the CoC upon the receipt and examination of the claims filed by the creditors.
Every Financial Creditor who submitted a claim and had it approved by IRP will be a member of the CoC and have the right to vote on the outcome there. A person will not be entitled to any claims or portion of the CoC in the CIRP if they do not file any claims. 

Importance of filing a claim

• Understanding the reasoning behind each creditor’s claim filing becomes essential. If no one makes claims after the IRP calls for them to be made public, the corporate debtor cannot be included in the resolution plan. This shows that the individual has no claims or money owed to the corporate debtor.
• The IRP, who has received and verified the claims of the creditors based on the papers submitted to him, then assigns the voting share to the creditor in line with the amount of claim due on the relevant corporate debtor. The percentage of voting rights is closely correlated with the quantity of claims submitted and approved by the IRP. 
• As a result, all creditors must expeditiously file their claims to the IRP. Only CoC members’ creditors may cast votes on the resolution plans submitted by the resolution applicants. Once authorized, the resolution applicant will pay each creditor in line with the terms of the approved resolution plan.
• If a person or creditor does not submit their claim before the resolution plan, they will not be paid by the firm or the new resolution company, in compliance with IBC Laws and other court orders by NCLAT. Stated otherwise, the full sum owed is forfeited.

How Do I File a Claim with IBC? 

To Claim filing under IBC are required to follow specific steps in a structured procedure. This is a thorough how-to: 

1. Proving the Debtor’s Insolvency: First, make sure that the debtor is following the procedures prescribed by the IBC for personal insolvency, liquidation, and bankruptcy settlement. Usually, a debtor’s inability to pay creditors leads to a financial crisis.
2. Consult a Legal Professional: For assistance with the claim submission process, it is recommended that you speak with a legal expert or insolvency specialist. They can guarantee that your claim is properly filed within the allotted period and offer advice on legal and procedural requirements. 
3. Fill out the Claim Form: Acquire the claim form as directed by the Indian Bankruptcy and Insolvency Board (IBBI). Your contact and KYC information, the amount owed, the justification for the claim, supporting documentation, and other facts concerning your claim are usually included in this form.
4. Corresponding Papers: Collect all pertinent supporting documentation that will support your claim, such as contracts, agreements, or invoices. Make sure you have copies of these records so you may include them with your claim. 
5. Information and Document Verification enclosed in the claim(s): Examine the information on the claim form carefully and make sure it is correct. Make sure it is precise and comprehensive to prevent any issues along the procedure. 
6. File the Claim: Send the completed Claim filing under IBC to the IRP, RP, liquidator, etc., who is handling the case, along with the supporting documentation. Make sure you adhere to any deadlines for submitting claims. 
7. Acknowledgment: The IRP/RP/Liquidator, etc., need to give you a claim acknowledgment after it is submitted. This acknowledgment proves that we have received your claim.

Conclusion

We can conclude that to pursue any outstanding claims that they could have against an organization that is going through the Corporate Insolvency Resolution Process (CIRP), a person, including a personal guarantor under IBC, must file any remaining claims with the Insolvency Resolution Professional (IRP) or Resolution Professional (RP) as soon as possible. This is an important stage because it guarantees that the interests of creditors—including personal guarantors—are publicly acknowledged and taken into account during the bankruptcy procedure. It is crucial to interact with the insolvency resolution framework quickly and proactively because failing to file claims on time may prevent the creditor, including personal guarantors, from receiving any assets during the resolution process.